Study Finds Newspapers Struggling to Find Digital Revenue

According to a new study set for release today by Pew Research Center’s Project for Excellence in Journalism, newspapers aren’t having much luck in finding a new revenue model for the digital age. The study’s findings, based on data from 38 anonymous newspapers and interviews with multiple top executives, were fairly bleak. The newspapers were losing seven dollars in print advertising for every one gained in digital revenue. And digital ad revenue is still just a fraction of print ad revenue—on average, print advertising accounted for 92 percent of revenues at the papers surveyed.

However, data varied greatly among papers. At one newspaper, digital revenue fell by 37 percent in the last year of full data. On the other end of the spectrum, another paper grew digital ad revenue 63 percent while its print revenue grew 8 percent. The future of each newspaper can be “significantly affected by company culture and management,” regardless of its size, said PEJ.

The newspapers’ success also varied based on how they spent their digital ad dollars. According to the study, advertising based on online consumer behavior is the category that's likely to dominate local advertising and has proved very successful for several papers. Only 40 percent of newspapers said that targeted ads were a “major” part of their sales efforts, though. Instead, most ad dollars are going toward established platforms like conventional display ads and online classified ads. Many executives were also “enthusiastic” about the prospect of mobile advertising, but at the papers that shared private data with PEJ, mobile advertising accounted for only 1 percent of digital revenue in 2011.

With the clear difficulties on the ad front, about half of the newspapers surveyed said that they were looking into “nontraditional revenue,” like consulting or events.

Despite the potential for innovation, most executives painted a picture of a newspaper culture resistant to change and still unable to successfully navigate the digital age. As one exec not-so-optimistically put it, “There’s no doubt we’re going out of business right now.”

According to a new study set for release today by Pew Research Center’s Project for Excellence in Journalism, newspapers aren’t having much luck in finding a new revenue model for the digital age. The study’s findings, based on data from 38 anonymous newspapers and interviews with multiple top executives, were fairly bleak. The newspapers were losing seven dollars in print advertising for every one gained in digital revenue. And digital ad revenue is still just a fraction of print ad revenue—on average, print advertising accounted for 92 percent of revenues at the papers surveyed.

However, data varied greatly among papers. At one newspaper, digital revenue fell by 37 percent in the last year of full data. On the other end of the spectrum, another paper grew digital ad revenue 63 percent while its print revenue grew 8 percent. The future of each newspaper can be “significantly affected by company culture and management,” regardless of its size, said PEJ.

The newspapers’ success also varied based on how they spent their digital ad dollars. According to the study, advertising based on online consumer behavior is the category that's likely to dominate local advertising and has proved very successful for several papers. Only 40 percent of newspapers said that targeted ads were a “major” part of their sales efforts, though. Instead, most ad dollars are going toward established platforms like conventional display ads and online classified ads. Many executives were also “enthusiastic” about the prospect of mobile advertising, but at the papers that shared private data with PEJ, mobile advertising accounted for only 1 percent of digital revenue in 2011.

With the clear difficulties on the ad front, about half of the newspapers surveyed said that they were looking into “nontraditional revenue,” like consulting or events.

Despite the potential for innovation, most executives painted a picture of a newspaper culture resistant to change and still unable to successfully navigate the digital age. As one exec not-so-optimistically put it, “There’s no doubt we’re going out of business right now.”